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ICBC is paying 19 per cent more for legal costs today than it did five years ago, as more injured people appear to be turning to lawyers to help them settle claims, according to new statistics provided to The Vancouver Sun.

The Insurance Corp. of B.C. said last week it is applying to hike rates, blaming soaring legal costs as one of the main reasons it plans to charge the province’s drivers more for insurance policies.

Lawyers were involved in nearly half — 45 per cent — of all bodily injury claims in 2012, which increases costs even if the file is settled before reaching trial, according to ICBC spokesman Adam Grossman.

While overall legal costs have jumped by about 19 per cent over the last five years, the “bulk” of the new expenses relate to fees generated by the plaintiffs’ lawyers, he said.

Bills for lawyers representing plaintiffs who won their lawsuits increased about 30 per cent over the past five years to $136 million in 2012, Grossman stated in an email.

Under Canadian law, the losing side is required to cover the plaintiffs’ out-of-pocket costs for disbursements — such as medical reports, court fees, and interpreters. It also covers a small portion of the plaintiffs’ legal fees based on a tariff or set rate for different types of legal services.

Vancouver personal injury lawyer Wesley Mussio believes the bodily-injury claims costs fuelling ICBC’s rate hikes are the result of a failed “hardball” approach to claim settlements that is pushing more complainants toward lawyers and trials.

“Instead of negotiating early and often with people at a reasonable number ... they’re not and they’re just increasing the costs exponentially,” said Mussio, who started his career representing ICBC.

“With the Internet, people can easily look up lawsuit results and say ‘You’re not paying me enough,’ and if ICBC says ‘Too bad,’ then they go to a lawyer.”

Grossman’s email, however, said ICBC’s “goal is always to make a fair offer on every claim and to settle claims without customers feeling the need to look to the legal system.”

He added nearly all claims are settled before reaching trial, even if a lawyer is involved. On average, about 250 cases proceed to trial each year, which is 0.6% of total bodily injury claims in 2012 (44,200).

Grossman said cases often proceed to trial when plaintiffs’ counsel seek, on average, one and a half times what a court deems as a “fair” settlement. “ICBC has an obligation to resist paying compensation that is not fair in order to keep insurance rates as low as possible.”

The number of cases going to mediation — to avoid a trial — has steadily increased since 2010, he added.

Personal injury lawyer Anthony Thomas has heard the theory that tougher tactics by ICBC are driving more claimants to hire litigators, but cautioned he hasn’t seen statistics to back up the premise.

“There’s a perception that more people are represented [by lawyers], and when people are acting on their own typically claims are settled rather quickly and cheaply without incurring a lot of expense,” Thomas said.

“But I don’t know whether it reflects more consumer awareness and sophistication of clients, or unfairness in the way they are being treated [by ICBC].”

However, he believes part of the explanation for ICBC’s soaring legal costs is court system delays — which means lawyers are on cases longer — and the rising price of expert reports — in particular medical reports from physicians or psychologists who are specialists in certain areas.

Twenty-five years ago, Thomas said, an expert report would be less than $1,000; now, it can be $5,000. And in a case lost by ICBC, the corporation pays for those bills for both sides.

Veteran personal injury lawyer Tony Vecchio said he doesn’t accept ICBC’s premise that the “bulk” of their rising legal costs is due to fees incurred by plaintiffs’ lawyers.

“Those [disbursement] costs have nothing to do with legal fees,” said Vecchio, a past president of the Trial Lawyers Association of B.C. “That is a misnomer.”

The Sun asked ICBC for more information about the legal fees, but Grossman said it could not provide more details before press time Tuesday.

When asked why more people might be turning to litigation to solve claims, Vecchio said the question can only be answered by asking how ICBC treats the plaintiffs: “If they treated people better, clients wouldn’t be coming to lawyers.”

Mussio noted the U.S. has a different law system that doesn’t require the losing side to pay the winner’s costs and disbursements. “So there’s a little bit of a disincentive: the plaintiff can’t spend all the money on medical fees to get reports and everything down in the States because it comes out of their own pocket, whereas in Canada, ICBC has to cover it.”

ICBC announced last week it was applying to the B.C. Utilities Commission for a 4.9-per-cent hike in basic insurance rates effective Nov. 1, blaming escalating costs for bodily injury claims.

The increase would be about $36 a year for an average driver with only basic insurance. However, for the roughly 80 per cent of motorists who purchase ICBC’s full vehicle insurance, the average increase would equate to about $11 a year, or less than $1 a month. That increase is offset by a four per cent decrease in ICBC’s optional coverage, spurred by a downturn in auto crime and the cutting of employee costs.

ICBC legal bills 19 per cent higher than five years ago; some lawyers blame ‘hardball’ approach

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